As a private lender we do a lot of deals where on paper a client cannot get traditional financing due to serviceability but has a good exit strategy i.e flip or refinance to a traditional after renovation etc.

We always record our interest on Title by way of mortgage (first / second) or caveat.

Approved a deal today for a forum client who owned a property unencumbered but because of other investment loans was unable to borrow anything thru a traditional source. We approved a 1RM for 50% as a cash out loan,

Some borrowers moan at the rates of interest / application fees Private lenders charge but thankfully there are so many borrowers who realise they still make good money and understand that without finance their investing journey comes to a halt.

Marietta Xanthos I E: [email protected]Brisbane based Mortgage Broker working for Richard TaylorSpecialist in Non Resident lending. Available for purchase and refinance.

I know that many lenders do not want 2nd mortgages, other interested parties, caveats etc over the property they have an interest in. This seems pretty obvious to me & logical too, and contract may state your obliged to remove/take action on last contract I read, the way I see it, you could be breaching initial contract, but maybe they ignore this and no penalty, I have not had a third party employ a second mortgage in certain circumstances they may be fine with it, or some lenders less touchy over such things.

If if the place has a 80 or 90 LVR according to that initial lenders valuation/s, they are not going to just sit there as second mortgage is slapped on or caveats, this would be sounding alarm bells for them, and if it did not, it would for me if I was the lender.

If the legislation stamped out the scams, why is there so many of them. It is like more legislation will stop crime, but criminals do not care about the law.

Lenders can't stop a third party from putting a caveat on a property after they have registered the first mortgage. If they haven't registered their interest prior to the caveat, most lenders would refuse to settle.

My understanding is that a second mortgage generally requires permission from the first mortgagor.

I was more talking of caveats, but the first mortgage holder is not irrelevant, no matter who they are in my eyes & if you (as in the client) are in breach of contract (with the first mortgage holder), then they can potentially cause a headache, not for you, but for the one under contract maybe. There are far more lenders than just 5 major banks.

Your post seems to only be thinking of or from your own standpoint and potential situations, as you have missed what I was talking about, I am not sure it even worth carrying on discussing any further.

Lenders can't stop a third party from putting a caveat on a property after they have registered the first mortgage. If they haven't registered their interest prior to the caveat, most lenders would refuse to settle.

My understanding is that a second mortgage generally requires permission from the first mortgagor.

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This is my understanding too.

But I also believe they can peruse those on the loan to remove any caveat, it may depend though.

Terry_wStructuring Lawyer and Finance Broker - all statesBusiness Member

Mortgages can be in 2 forms:
a) registered or legal mortgages, and
b) unregistered or equitable mortgages

Registered ones are recorded on title and unregistered ones are no. An unregistered mortgage can be evidenced by the mortgagee lodging a caveat. A caveat is not a form of security but just notification that someone has an equitable interest in the property such as the mortgage.

The general rule is that legal takes priority over equitable and first in time takes priority over later in time.

In some states the first mortgagee must consent to the registration of a subsequent mortgage. The bank's will usually want to deed of priority to be entered into between themselves and the mortgagor and the new mortgagee. This will make sure they the first mortgagees get priority and that there is no dispute - though it may not be necessary.

The mortgage agreements that I have read generally have a clause in which the mortgagor agrees not to let a caveat to be lodged over title and if one has been lodged they must do what they can to remove it. I am not sure if it is a breach of mortgage to allow someone to lodge in this case and if the bank could call in the loan or not, but in practice the lender would not know unless they did another title search - which they would only do at settlement and on any loan increases or other changes requested which require the title to be produced.

My understanding is that many loan agreements have a clause in which the mortgagor agrees to not consent to others lodging a caveat on the property and if one is lodge they must do everything in their power to remove it.

Terryw - Closed to new clients until 2018Note my posts are general in nature, please seek specific advice before acting
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I see I am not alone and others have seen the same requirements or wording in contracts that I have.

This is what my understanding is too, you must make effort to remove. Am sure your aware that may not be trivial if the applicant refuses - but ignoring that, it also, as your alluding too, would seem you knowingly broke/breached your contract if you knew it was going to happen, let alone initiated it.

Would endear you with the lender on next application too no doubt (or maybe they do not care, but I won't find out this way).

Anyway,

A deed should allow you to place a caveat if you needed too, or at some later point, or in other words, a/the deed, would be an unregistered mortgage ? A caveat is of no use except to enforce the deed, or rather, prevent sale and loss of proceeds.

More to the point, do you think people are doing things this way outside of family and friends ?

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